Immigration Analysis Should Include Costs and Benefits

Americans for Tax Reform (ATR) pushed back today on a Heritage Foundation study that found a net fiscal cost of $6.3 trillion associated with S.744, the immigration reform bill pending in the United States Senate. The primary flaw in this analysis is that it considers only costs and ignores benefits. But even the cost estimate itself is vastly overblown.

Among the study’s flaws:

This is a static fiscal score, not a dynamic analysis. Conservatives believe that policy changes should be evaluated in a way that takes both costs and benefits into account. Unfortunately, the authors of this study do not attempt to measure indirect fiscal effects, and their impact on GDP growth and federal revenues. After listing possible aspects of immigration reform that could be scored dynamically, the authors write, “Because figures are imprecise, none of the indirect fiscal effects discussed in this section is included in the fiscal analysis in this paper.” But measuring these economic effects is imperative to a thorough analysis of the bill. A Cato Institute analysis using a dynamic model to evaluate proposed changes similar to those in S.744 projected a net GDP increase of $1.5 trillion in the decade immediately after passage.

It lumps native-born Americans into the overall cost of immigration by calculating costs by household, rather than by individual. Many undocumented immigrants are married to U.S. citizens or have citizen children. To the extent that low-income American family members receive government benefits, they are treated as immigrant-related costs in this study – massively inflating the overall cost estimate. The study ignores that many Americans receiving public benefits would do so regardless of immigration.

America has entitlement, welfare, and education crises, not an immigration crisis. While the overall cost specific to immigration is inflated, the authors are correct to point out our spiraling entitlement and welfare costs must be addressed. Thankfully, Republicans in the House and Senate are committed to tackling this problem. It must be resolved regardless of immigration levels. Rather than conceding the growth of the welfare state, the authors should acknowledge that a growing workforce, supplemented with foreign workers, is imperative to economic growth while focusing on restricting the runaway growth of government.

ATR’s Josh Culling issued the following statement:

“The Heritage Foundation is a treasured ally in the conservative movement and a pillar of the conservative policy community. However, this study is every bit as flawed as its 2007 iteration.

“This static analysis takes into account none of the universally-accepted economic benefits of immigration, choosing only to focus on costs. But the costs estimates are unfairly inflated. The authors count overall household costs, which often includes benefits paid to native-born, low-income American spouses and children of immigrants. Those costs would exist regardless of the immigration status of one’s partner; this is an indictment of our current welfare state, not proposed immigration reforms.

“ATR has worked tirelessly to reform our unsustainable entitlements, and will continue to do so. We should not put a pro-growth reform of our broken immigration system on hold while we do so. In fact, America should welcome more legal immigrants to pay into the system without receiving benefits and boost the economy while we work toward sustainable reform.

“Lawmakers and the American public should rely on an accurate accounting of immigration reform’s costs and benefits. Unfortunately, this study inaccurately reflects only one side of the ledger. Even the establishment Congressional Budget Office, which Heritage, ATR, and others have excoriated for employing only static models, will take economic growth into account when it scores the bill. I had hoped the same of the conservative movement’s happy warrior for dynamic scoring, the Heritage Foundation.”